The dollar fell 0.5 percent to 101.15 yen while the euro dropped by a similar margin to 136.70 yen. Both the dollar and euro sank to 11-week troughs on Tuesday, when the dollar hit a low of 100.755 yen and the euro fell as low as 136.25 yen.

Sha Ying | CNBC

The euro was flat against another safe-haven currency, the Swiss franc, trading at 1.2215 francs and not far from a 1-1/2 month low of 1.2185 struck on Monday.

European stock markets started on a soft note and S&P futures were in the red, and the mood could sour if final PMI surveys show any slowing of activity in the zone services sector.

Across the Atlantic, investors were awaiting the ADP reading on private hiring and ISM services sector survey. Any disappointment there would equally be taken badly by investors.

"Stock futures are falling so that is helping the yen," said Jeremy Stretch head of currency strategy at CIBC World Markets. "The key will be the U.S. data, and any missing of forecasts will challenge the global recovery story and push dollar/yen towards the 100.60 support."

Reflecting the nervousness, implied volatility in the dollar/yen and the euro/yen pairs - a gauge of how sharp swings will be in the currency market - remained elevated. One-week dollar/yen implied vols were trading at 11 percent, up from around 8 percent a week ago.

Against the dollar, the euro was flat at $1.3515, holding above a two-month low around $1.3477 set on Monday amid caution that the European Central Bank (ECB) could sound more dovish at Thursday's policy review.

With inflation running well below the ECB's target and the spectre of deflation gripping the euro zone, the central bank is under pressure to loosen policy. But there is also a risk that the ECB may hold off, given nascent signs of a recovery, a factor that could see the euro bounce.

The Australian dollar took a breather after a vicious short-covering rally in the previous session.

Although factors such as cooling in China's economic growth remain negative for the Aussie dollar, the shift in the RBA's stance to neutral from dovish is likely to give sellers pause, said Satoshi Okagawa, senior global markets analyst for Sumitomo Mitsui Banking Corporation in Singapore.

"It is starting to look a bit dangerous to just keep selling (the Aussie) on rallies," Okagawa said.

The Australian dollar fell 0.4 percent to $0.8890 after a 2 percent rally. Against the yen, it fell 0.8 percent to 90 yen after having surged 2.7 percent on Tuesday in its biggest one-day rise in 10 months.